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Marriott Turns Profit on Improved Business Travel

Thursday, 11 Feb 2010 09:06 AM

Marriott International Inc. moved to a fourth-quarter profit as business travel improved and leisure travelers took advantage of promotions, the hotel operator said Thursday.

Marriott also offered first-quarter and full-year earnings outlooks in range of analysts' expectations.

Upscale hotels, which account for about a quarter of the U.S. hotel market, were hit hard during the recession as business travelers and affluent guests scaled back on travel.

In recent months, however, hoteliers have said they're starting to see a recovery — albeit a small one — in that segment, even though room rates remain well below their peak.

It may take longer for leisure travel to pick up though, as consumers wary about the recession and high unemployment levels continue to postpone travel or take shorter trips. Many hotel companies have tried to woo this segment with discounts to keep rooms full.

Marriott earned $106 million, or 28 cents per share, for the period ended Jan. 1. That compares with a loss of $10 million, or 3 cents per share, a year earlier.

Removing restructuring charges of $7 million and other items, adjusted income from continuing operations was 32 cents per share.

Analysts surveyed by Thomson Reuters, whose estimates generally exclude one-time items, forecast a smaller profit of 26 cents per share.

The results also beat Marriott's previous guidance for adjusted earnings between 20 cents and 23 cents per share.

Chairman and CEO J.W. Marriott Jr. said in a statement that leisure travelers responded well to special offers and that business travel was starting to pick up, particularly overseas.

Marriott, whose hotels include Ritz-Carlton and its namesake, said revenue dropped to $3.38 billion from $3.78 billion.

But the performance still managed to surpass Wall Street's $3.21 billion estimate.

Revenue per available room for Marriott's worldwide company-run hotels open at least a year fell 13.1 percent in the quarter. Revenue per available room for its company-run North American full-service and luxury hotels open at least a year slipped 11.8 percent.

Revenue per available room is a key gauge of a lodging company's performance.

In the timeshare segment, adjusted sales and services revenue dipped 3 percent to $375 million.

Many hotel operators that have timeshare businesses have had difficulty with the segment during the recession as consumers have been reluctant to make such purchases while trying to conserve cash.

But Marriott remains optimistic, saying its timeshare contract sales could be "slightly higher" in 2010.

For the full year, Marriott posted a loss of $346 million, or 97 cents per share.

There was one less week for the year that Jan. 1.

Annual revenue declined to $10.91 billion from $12.88 billion.

The Bethesda, Md., company anticipates first-quarter earnings from continuing operations of 15 cents to 21 cents per share and 2010 earnings of 82 cents to 94 cents per share.

Analysts predict profit of 18 cents per share for the first quarter and 89 cents per share for the year.

Marriott said it will roll out two new brands — Edition and the Autograph Collection — this year. The company said its worldwide development pipeline totaled about 100,000 rooms at year's end, with almost 75 percent of those rooms outside North America.

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Marriott International Inc. moved to a fourth-quarter profit as business travel improved and leisure travelers took advantage of promotions, the hotel operator said Thursday.Marriott also offered first-quarter and full-year earnings outlooks in range of analysts'...
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2010-06-11
 

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